Medical: Rise in health premiums slows, still hurts, study finds

Family health insurance premiums went up an average of 4 percent this year, according to a new survey of more than 2,000 businesses released this week.

That seems like good news when you consider that health-coverage costs were increasing by double digits a decade before.

But the news is a bit less thrilling when you consider that wages increased by just 1.7 percent this year, and that premium hikes were still twice the rate of inflation.

The average tab to insure a family of four this year was $15,745, of which workers paid an average of $4,316. Premiums paid by employees have gone up 103 percent over the past decade.

Health-care inflation has run far ahead of the economy for decades, slowing only slightly when the economy slips. Since 1999, premiums have gone up 172 percent, while worker earnings have increased 47 percent, according to surveys done by the nonprofit, non-partisan Kaiser Family Foundation and the Health Research Educational Trust.

Drew Altman, Kaiser's president, said he thinks the economy is mostly responsible for keeping premiums down. People avoid using the health system as much as possible when times are tough.

A new Census Bureau report estimates that more than 48 million Americans were uninsured last year, almost 4 million fewer than went without coverage in 2010.

Most of those newly insured were covered through Medicare and Medicaid, the report said -- the share of people with government-sponsored coverage rose to 32.2 percent, up by1 percent over the previous year. The percentage of people covered by private insurance remained virtually the same as 2010, at 63.9 percent, as did the percentage covered through work - 55.1 percent. It was, however, the first time in a decade that the rate of private coverage had not gone down.

But other things are happening. Employers continue to impose new limits and co-payments for health services, and bigger shares of premiums. Nearly 20 percent of health plans offered by companies have a high deductible. Covered workers face primary care co-pays averaging $23, and $33 for specialists. The average co-pay for an emergency room visit is $113.

Not surprisingly, lower-wage families (making less than $25,000 a year) are more than three times as likely to be uninsured as households with incomes over $75,000. The Kaiser survey found workers at lower-wage firms pay about $1,000 more each year out of their paychecks than do employees at companies paying higher wages.

Less tangible is whether the 2010 health-care reform law is making much difference to costs.

Elements like including 2.9 million young adults on their parents' policies -- up from 1.3 million before the law changed -- could drive up spending, but probably not by much. One recent study projected the law would add about one tenth of one percent to health spending each year from now through 2021, while adding some 30 million people to insurance rolls.

Other insurance reforms, such as guaranteed preventive care and ending lifetime caps, now apply to about half of all employer-sponsored coverage, although provisions such as requiring 80 percent of premiums to go toward medical services don't apply to health plans that companies self-insure. About 60 percent of workers are covered through some type of self-insured plan.

Most of the employers surveyed said they would continue shifting coverage around to save money. They expect their costs will go up 7 percent or so next year, but that's an early read for most companies and could go down or up depending on employment trends and other factors.

Of course, with total health spending expected to pass $3 trillion by 2014 and make up 20 percent of domestic product by 2021, the industry's place in the economy short and long term can't be overlooked.

Nor can anyone with a stake in health services ignore the report issued by the Institute of Medicine earlier in September that concluded the U.S. medical system wastes $750 billion a year on unnecessary care, useless paperwork, fraud and other mistakes - and could recoup much of it with better management practices.

So even though the Kaiser survey and other employer-based studies suggest health-insurance inflation won't return to double digits for at least several years, getting and paying for coverage is still going to pinch family budgets.


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